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TMI Blog2008 (2) TMI 837X X X X Extracts X X X X X X X X Extracts X X X X ..... Club Limited. The undisputed fact is set out hereunder: The Calcutta Club Limited filed the above application before the learned Tribunal praying for declaration that the said club is not a "dealer" (1)Reported as Calcutta Club Ltd. v. Deputy Commissioner of Commercial Taxes and Hindustan Club Ltd. v. Commercial Tax Officer [2007] 10 VST 385 (WBTT). within the meaning of the West Bengal Sales Tax Act, 1994 as there is no sale of any goods in the form of food, refreshment and drinks by the club to its permanent members and as such the club, the applicant, is not liable to pay sales tax thereon under the West Bengal Sales Tax Act, 1994 and for quashing and/or setting aside the letters of demand and for nullifying action of the respondents threatening to levy tax on the supplies made to the permanent members. The said club was not paying sales tax nor was registered as a dealer before the Sales Tax Act, 1994 came into force and even thereafter for sometime. Being encouraged by the judgment and order dated May 11, 1994 of the honourable Supreme Court in the case of Automobile Association of Eastern India v. State of West Bengal [2002] 40 STA 154, the State authority has star ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se (f) of article 366(29A) of the Constitution of India such supply for a consideration shall be "deemed to be a sale". He submits that identical question came for consideration before the Andhra Pradesh and Madras High Courts and both the honourable High Courts have held that in view of the amendment of the Constitution with insertion of article 366(29A) such transactions are sales and as such exigible to sales tax, irrespective of mutuality or reciprocity between the members and the club and, therefore, all earlier judgments in this regard are no longer relevant. According to him, in the case of Automobile Association of Eastern India v. State of West Bengal reported in [2002] 40 STA 154, the Supreme Court has held so. He urges that the expression "deemed sale" in article 366(29A) of the Constitution is a fiction of law, it must be given full sweep of its operation referring to a decision of the Supreme Court in Commissioner of Commercial Tax v. Swarn Rekha Cokes and Coals Pvt. Ltd. reported in [2004] 136 STC 57. Supply by the Calcutta Club Limited to is members as it appears from its Memorandum of Association being in "annexure A" at page 101 (clause g) of food, drinks, etc., is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidered and reasoned Larger Bench decision of the Supreme Court in case of Bharat Sanchar Nigam Ltd. v. Union of India reported in [2006] 145 STC 91; [2006] 3 VST 95 which referred to and relied upon the statement of objects for construing the scope of the various sub-clauses and has held that sub-clause (f) was applied to catering contracts and was meant to overrule its decisions in State of Himachal Pradesh v. Associated Hotels of India Ltd. [1972] 29 STC 474 (SC) and Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi [1978] 42 STC 386 (SC) cases which dealt with supply of food and services by hotels to its guests and restaurants to its customers. In this judgment, according to him, it has been held that extended meaning of "sale" in six sub-clauses were transaction specific and did not generally enlarge the concept of sale. He further submits that sub-clause (f) postulates supply for consideration. There can be no supply by an agent to a principal or of any consideration therefor. The agent acts for and on account of his principal and not antagonistic to him. The principal cannot supply to himself or pay consideration to himself as a servant making purchases for ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re identical meaning thereby the club though incorporated act as agent and/or instrumentality of the members. In this case the Tribunal had accepted the judgment rendered in case of Chelmsford Club v. Commissioner of Income-tax [2000] 243 ITR 89 (SC). In the case of Automobile Association of Bengal v. Commissioner of Income-tax [1968] 69 ITR 878 (Cal) the same principle was reiterated by this court that principle of mutuality should come into play in case of members' club and there must be an identity between the contributors to the fund and the participators therein. This view has been followed constantly in each and every case. But the debate has been reopened for the purpose of imposition of sales tax eliminating principle of mutuality in members' club. In view of the aforesaid definition given in the 1994 Act read with the constitutional provision as above whether the mutuality concept in a members' club is done away with or not. In order to examine the reasoning and findings of the learned Tribunal we feel it appropriate to set out the aforesaid article 366, clause (29A), sub-clauses (e) and (f) and also the definition of section 2(30) of the 1994 Act: ". . . (e) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to the members of an incorporated members' club it is treated to be sale for the purpose of imposition of tax. Similar view is taken in case of Cosmopolitan Club v. Tamil Nadu Taxation Special Tribunal reported in [2002] 127 STC 475 (Mad). The Supreme Court in case of Automobile Association of Eastern India [2002] 40 STA 154 by a judgment and order dated May 11, 1994 has made an observation that in view of the Constitutional amendment the levy can easily be sustained for the period commencing from October 1, 1983. The sheet anchor of the argument of Mr. Gupta is that in view of the aforesaid judgments of two Division Benches of two different High Courts and the decision of the Supreme Court in Automobile Association of Eastern India's case [2002] 40 STA 154 the learned Tribunal was not justified in ignoring the same, to apply the principle of mutuality so as to keep the members' club (incorporated) out of the purview of the said Sales Tax Act. We have carefully read the judgment of Division Bench of A.P. High Court as well as that of Madras High Court. We are of the view that learned Tribunal has correctly read the same and we endorse the view as is also been tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is taken as its face value. The argument may be attractive apparently but while considering deep into the matter we do not find any substance in it. The Supreme Court decision as rightly recorded by the learned Tribunal in case of Automobile Association of Eastern India [2002] 40 STA 154 is not a precedent to be followed. The Supreme Court has not decided as to whether the members' club is also included by the definition or not. The Supreme Court has not decided as to whether the concept of mutuality of a members' club whether incorporated or unincorporated is done away with by the Constitutional amendment. We approve observation of the learned Tribunal that the said judgment is not a binding precedent as no argument was advanced and no ratio is decided which is merely a passing observation. Accordingly the aforesaid order is not really judgment on issue rather sub-silentio. Then question remains whether the amended provision of article 366, sub-clauses (e) and (f) of clause (29A) is rendered infructuous in case of a club or body of association. To our mind it is not so because there are large number of clubs which may be proprietary one and further which also deals wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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